Special for job class: Basic salary and PF contribution will increase from April 1, but you will have less cash salary
The structure of your celery may change in the new year so some part of the allowance may be included in your basic celery. Following the new wage rule, which will take effect in April 2021, employers can restructure your salary package. PF contributions will also increase if the government applies the new definition of salary. Companies with PF contributions may have to review the salary increment budget. Benefit plans such as gratuity and leave encashment may be increased, which may affect your take home salary under the new rule.
The celery structure may change
According to sources, the new celery structure may be implemented from next year. Under the new structure your basic salary will be 50 per cent of the total salary in any case. The basic salary (basic salary and inflation allowance in government jobs) should be 50% or more of the total salary from April. In such a case your basic salary and PF contribution will increase but take home salary i.e. your salary will decrease. The new pay rule will see a big change in the salary structure.
Benefit plans can be reviewed
Companies can now review staff benefit plans under a variety of models. This includes things like gratuity and leave encashment. In fact the same companies in which staff stays longer have come up against things like gratuity and leave encashment.
Understand how change will happen
Companies are now considering making changes to their operations as proposed in Budget 2021. If an organization adopts a broad definition of wages, it may have to increase its contribution to the provident fund. Previously, the contribution in PF depended on the basic pay, which included DA and special allowance along with the basic penny.
In India, staff working in companies are actually paid a basic pay of 30 to 50 per cent of gross salary. The structure of celery is completed by adding the remaining allowances along with it. According to experts, some companies may add up to 50 percent of their staff salary as basic pay.
The industry has two demands
The first is that the government should clearly decide which allowances will be clubbed with the basic salary and which allowances will not be given. In addition, a condition has been laid down that it will not be applied as a uniform to all sectors. Sectors will be decided for it. According to sources, the government and industry will now sit down and classify those sectors.
When to apply
The Code on Minimum Wages has been approved and the government has started the process of making the rule. Allowances can be included in the basic salary along with the rule making process.
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